Browsing by study line "Yleinen opintosuunta"

In this thesis the influential oil market model proposed by Kilian and Murphy (2014) is studied with statistical identification. The identification method used provides point identification in the set defined by restrictions used in the earlier literature. This method allows us to obtain point estimates for the price elasticity of oil production which has been the source of differences in the results of the earlier literature. Additionally, the importance of oil market shocks in explaining the changes in oil prices is studied with the identified models. The earlier literature suggests that oil demand shocks are more important drivers of oil prices than oil supply shocks. Studies allowing for higher levels of price elasticity of oil production find oil production shocks to be relatively more important than the studies using low upper bounds for this elasticity. According to microeconomic studies, higher levels of price elasticity of oil production could be explained by increases in shale oil production. Identification of the oil market SVAR model is achieved by extracting the model which maximizes the independence of the structural shocks. This optimization task can be challenging. Hence the performance of the estimation can be improved with prior knowledge about the structural shocks by inclusion of restrictions into the optimization problem. In this thesis the distance covariance measure is used to measure the independence of the structural shocks. The distance covariance measure is minimized to obtain the model with the most independent structural shocks in the set defined by the restrictions. The constrained optimization problem is solved with external penalty optimization method. Two distinct minima are obtained from the optimization task which suggest different dynamics for the oil market shocks. The first optima suggest that the price elasticity of oil production is close to zero. The other optima suggest higher levels for this elasticity. Both optima suggest that the elasticity of oil production differs in response to different shocks. With the first optima supply shocks are found to be more important drivers of oil prices than found in the earlier literature. With the second optima the importance of production shocks is found to be more similar to the results obtained in the earlier literature. Additionally, speculative shocks are found to be important drivers of the oil prices with this optimum. The method which uses external penalty optimization method is compared to the method based on sampling used earlier in the literature. It is found that the method based on sampling finds less independent structural shocks than the method based on external penalty optimization method.

In this thesis, my aim is to provide some clarity on how the Finnish economy responded to the European carbon policy shocks. These shocks are identified by using interday price variation of the European Union emission trading certificate futures markets around regulatory changes in the carbon policy regime. Using this instrumental variable, the structural shocks of interest i.e., carbon policy shock, can be identified. In addition to the empirical finding on the Finnish economy, this thesis extends the previously identified time series on the regulatory surprises. Based on the empirical results of this thesis propose, it can be argued that the structural shocks emitting from the European Union carbon policy regime have a dual effect on the Finnish economy. A short-term stimulating effect and a long-term slowing effect. Only the long-term effects are statistically significant, the results are still interestingly different from the results from a European Union-wide study. The possible reasons behind these effects are also discussed.

Tekstiiliteollisuus on yksi maailman eniten saastuttavista teollisuuden aloista ja sen globaalit ilmasto- ja ympäristövaikutukset ovat mittavat. Osana EU:n kestävän kehityksen ohjelmaa Euroopan komissio on vuonna 2022 julkaissut uuden kestäviä ja kiertotalouteen perustuvia tekstiilejä koskevan EU:n strategian (tekstiilistrategia), jonka tavoitteena on kannustaa unionin jäsenmaita luomaan kestävämpään tekstiilijärjestelmään ohjaavaa sääntelyä. Tämän tutkielman tavoitteena on selvittää, millaisia talouspoliittisia keinoja tekstiilialan ilmastopäästötavoitteiden saavuttamiseksi voidaan hyödyntää tekstiilialan erityispiirteet huomioiden. Tekstiilialan erityispiirteisiin kuuluvat alati kasvava tuotanto, alhainen materiaalien kierrätysaste ja pitkät, globaalit tuotantoketjut. EU:n alueella kulutettujen tekstiilien ilmastopäästöistä 75 % syntyy EU:n ulkopuolella. Kansallisella verosääntelyllä voidaan ohjata tekstiilituotteiden kulutusta, mutta päästövähennystavoitteiden saavuttaminen vaatii kansallisten ja alueellisten päästökauppamekanismien yhdistämistä ja päästötavoitteiden yhdenmukaisuutta. Suurin osa tekstiilialan päästöistä syntyy tekstiilimateriaalin tuotantovaiheessa, joten toimilla, jotka edistävät energiaintensiivisen tuotannon päästövähennyksiä, on suurin potentiaali vaikuttaa koko alan ilmastopäästöihin.

The broad US dollar index has emerged as a global risk factor since the global financial crisis (GFC). When the spot dollar exchange rate appreciates strongly against a broad basket of currencies, there is a substantial decline in global dollar credit and a tightening of global financial conditions. This relationship reflects several macroeconomic and financial forces, of which mostly global factors related to international finance are considered. In particular, this thesis examines how the relationship is associated with risk appetite, leverage, and balance sheet capacity of global banks to intermediate cross-border capital flows. In addition, the underlying causes are considered through the global role of the dollar as the dominant currency for the international monetary and financial system. The empirical framework examines the dynamic relationship between the dollar, aggregate dollar-denominated cross-border bank flows, and various measures of balance sheet capacity of financial intermediaries. The mechanism follows Bruno and Shin (2015a, b) and the risk-taking channel of exchange rate fluctuations, where a dollar appreciation leads to a decline in the supply of dollar funding through reduced risk-taking capacity of global banks in the presence of currency mismatches. In addition, the framework is evaluated using a measure of global safe asset demand for dollar assets. Both vector autoregressions (VARs) and local projections (LPs) are used for structural analysis. The results support the mechanism in terms of economic and statistical significance, which are pronounced when the 30-year Treasury-swap spread is used as the measure of global intermediary capacity and also hold for the post-GFC sample. The benchmark model suggests that a positive unit shock in the widening of the swap spread immediately leads to a 0.8% increase in the growth of dollar-denominated cross-border bank flows and an equivalent contemporaneous depreciation of the dollar. The short-term effects of a swap spread shock last over three quarters. In turn, a broad dollar appreciation shock causes a narrowing of the 30-year Treasury-swap spread and a decline in the short-term growth of dollar-denominated cross-border bank flows. A positive shock to global demand for safe assets denominated in dollars is associated with a simultaneous 0.6% appreciation of the dollar. While the empirical evidence in this thesis does not establish a strong causal link between exchange rate movements, capital flows, and intermediary constraints, the results are consistent with similar work in the literature. Especially, the relationship between the 30-year Treasury-swap spread, bank leverage, and the dollar is consistent with studies that examine in more detail the co-movement between binding leverage constraints on global banks, higher costs of global dollar funding, and the strength of the dollar. The emergence of the post-GFC relationship and sustained appreciation of the dollar are typically found to be related to US monetary policy, increased role of the dollar as an international currency, greater demand for dollar assets, and reduced financial intermediation capacity in the dollar funding markets.

This thesis aims to identify and measure labor demand and supply shocks caused by COVID-19 in Finland in 2020 and aims to replicate results from an earlier study by Brinca et al. in 2021. The method utilized is a model estimation on a Bayesian structural vector autoregression framework on quarterly data of hours worked and real wages by work sector. In order to capture the labor market dynamics in Finland within the framework, a literature review is conducted and the theory and methods are then outlined. Informative priors and literature-based parameters are established for the model, and analysis software computation is then used to and estimate the model. The model estimations show that most sectors suffered large negative supply and demand shocks in the first quarter of 2020, with significant heterogeneity between sectoral shock response. It is assessed that sectors with greater possibilities of remote work are less affected by the shocks than sectors of high-contact work. Labor supply shocks account for over 80% of the total shock effects. In the second quarter of 2020, most sectors, in turn, experienced large positive supply and demand shocks that affected the sectors with significant heterogeneity once more, with the previous quarter’s most affected sectors again experiencing the largest shocks. Labor supply shocks again accounted for around 80% of the total shock effects. The results in this thesis share a trend with the earlier study in sector heterogeneity and the shocks’ total impacts, but find an increased share in the effect of labor supply shocks on the total impact of the COVID-19 shocks.

This master's thesis examines how the statutory minimum wage reform introduced in 2015 has affected the German labor market structure and what conclusions can be drawn from it with an eye to the future. The purpose is to understand how the labor market has reacted and adapted to significantly increased labor costs in the short term. Additionally, we must consider the potential long-term adverse effects in Germany and the EU since we are gradually transitioning into an era of higher minimum wages. The topic of this thesis is partly motivated by the upcoming European minimum wage directive, whose main objective is to provide adequate working and living conditions for all European workers in the near future. The subject is also topical because the minimum wage's role is even more emphasized during the economic recession. The structure of the thesis is a literature review, and the latest scientific literature has been used as an aid in the analysis and interpretation of observations. The goal is also to find out where further research should be directed. The examination of the minimum wage effects is divided between the short, medium, and long term. The primary focus has been on evaluating the key adjustment channels behind the observed employment elasticities and to what extent these mechanisms could be utilized in future minimum wage reforms. In other words, how to efficiently avoid the possible harmful effects of the minimum wage. In the case of Germany, the focus is on the adjustment mechanisms (e.g., the price pass-through effect, a degree of monopsony power, reductions in working hours) used by firms and the employment market dynamics that could explain the relatively small-scale observed unemployment effects in the short and medium term, such as the degree of compliance with the policy and the level of market competition. The putty-clay model is used for the longer-term evaluation, where possible adverse effects are examined from the viewpoint of automation and digitalization. Examining the long-term effects is essential, but unfortunately, it has not yet been extensively studied. Evidence suggests that the current minimum wage development may accelerate capital-labor substitution and reduce the demand for low-skilled workers in automatable jobs. Because this development is slow, future research should concentrate on distinguishing between short-and long-term effects more effectively. At present, the long-term employment effects are still ambiguous and theoretical but potentially quite substantial due to investments in physical capital and technological solutions. Consequently, minimum wage increases and related policy adjustments should be made considering the country's economic reality.

This thesis provides a comprehensive review of the extent a Fiscal Union can address the inherent weaknesses of insufficient policy coordination, limited risk-sharing mechanisms and incomplete Banking Union within the Economic and Monetary Union (EMU). Economic concerns over the functioning of the EMU have persisted since its establishment, but the COVID-19 pandemic has highlighted these intrinsic weaknesses. This paper focuses on a Fiscal Union primarily as an instrument of stabilisation given that the COVID-19 pandemic and earlier crises have underlined that the EMU is particularly vulnerable to economic shocks causing asymmetric effects across the union. This thesis compares the EMU currency area with the US currency area using the Optimum Currency Area (OCA) theory and finds that with less labour and capital mobility, the EMU would significantly benefit from a Fiscal Union to address arising imbalances. Furthermore, many of the intrinsic weaknesses of the EMU relate directly to the absence of fiscal integration given a single monetary policy. Striving towards a Fiscal Union for the euro area would help address the inherent weaknesses by improving monetary-fiscal policy coordination, providing better risk-sharing mechanisms and incentivising private markets to contribute effectively to risk-sharing. This paper finds that a Fiscal Union is more suitable acting as a stabilising function to counteract the asymmetric effects of aggregate shocks but less so in ensuring economic convergence across the union. Appropriate next steps are ensuring a fiscal backstop for the Banking Union, improving the monitoring of funds distributed by the Recovery and Resilience Facility (RRF), and stronger enforcement of fiscal rules set by the Stability and Growth Pact (SGP). Establishing a permanent crisis management mechanism similar to the NGEU would improve the union's readiness for future shocks. Without further progress to improve the resilience of the EMU, the union continues to face existential risk. Progress towards improving the competitiveness and resilience of the EMU cannot be categorically split into features relating to fiscal, economic, financial, and political integration, as these all affect each other. The interdependence of these aspects emphasises that on its own, a Fiscal Union cannot overcome the inherent weaknesses of the EMU. Therefore, it is fundamental to recognise that development toward a more resilient EMU requires progress within all these aspects.

Yhden puolueen ehdottomat enemmistöt ovat Suomen kunnanvaltuustoissa varsin yleisiä. Tällaisissa valtuustoissa suurimmalla puolueella on yli puolet valtuustopaikoista ja päätöksenteon kannalta olennainen enemmistö. Suomen kuntavaaleissa käydään järjestään täpäriä vaaleja, joissa ehdottoman enemmistön muodostuminen suurimmalle puolueelle on hyvin pienestä kiinni – usein jopa yksittäisistä äänistä. Toisin sanoen yksittäinen äänestäjäjoukko voi äänestyspäätöksellään vaikuttaa siihen, onko tulevalla valtuustokaudella yhdellä puolueella yli puolet valtuustopaikoista. Tämä avaa mielenkiintoisia mahdollisuuksia muun muassa taktiselle äänestämiselle, sillä yksittäisillä äänillä voi olla ratkaiseva vaikutus. Siksi juuri taktisen äänestämisen näkökulmasta on tärkeää ymmärtää, millaisia seurauksia ehdottomalla enemmistöllä voi olla päätöksentekoon sekä yleisesti kunnan toimintaan. Hyvinvointialueiden perustamisen myötä yhdeksi kuntien merkittävimmäksi tehtäväksi on jäänyt opetus- ja kulttuuritoiminnan järjestäminen. Näistä syistä tarkastelen tässä tutkielmassa, vaikuttaako ehdoton enemmistö kunnan opetus- ja kulttuuritoiminnan menoihin. Hyödynnän kuntavaaleissa käytyjä täpäriä vaaleja ja vertaan keskenään kuntia, joissa suurin puolue on juuri ja juuri saavuttanut ehdottoman enemmistön, sellaisiin kuntiin, joissa se on juuri ja juuri jäänyt saavuttamatta. Estimoin vaikutusta regressioepäjatkuvuusmenetelmän (RDD) avulla. Samaa kysymystä on aikaisemmin tutkittu myös hyödyntäen RDD:tä ja Suomen kuntavaalidataa. Tähän olemassa olevaan kirjallisuuteen verrattuna tulen tarkastelemaan tässä tutkielmassa kysymystä tuoreemmalta ajanjaksolta vuosilta 2008–2020 sisältäen kolme kokonaista vaalikautta ja yhteensä 878 yksittäistä vaalia. Aiemmasta kirjallisuudesta poiketen tulosten mukaan ehdottomalla enemmistöllä vaikuttaisi olevan positiivinen vaikutus. Se on suunnilleen samaa luokkaa läpi vaalikauden, joskin tilastollisesti merkitsevä ainoastaan keskellä vaalikautta kolmantena vuotena. Tuolloin suurimman puolueen ehdoton enemmistö kunnanvaltuustossa kasvattaa opetus- ja kulttuuritoiminnan nettokäyttökustannuksia noin 60 euroa asukasta kohden, mikä vastaa noin neljää prosenttia Suomen kuntien keskimääräisestä opetus- ja kulttuuritoiminnan vuosittaisesta nettokäyttökustannuksesta.

This thesis investigates whether the Finnish house market experienced a housing bubble through 2015 to 2021. During the period in question, the world suffered the global pandemic, Covid-19, which influenced fluctuations in different markets such as labor, housing, and financial. Study of this thesis focuses on the house market of Finland as a whole, divided between old and new apartment types with data spreading quarterly from 2015 to 2021. Beginning with summarizing the various definitions of a bubble made in the literature and studies regarding housing bubbles, this thesis bases its study on the most commonly used definition of bubble presented as deviation from economic fundamentals. After the introduction and definition discussion, this thesis introduces the theoretical framework and analysis of the three conventional ratios of house price dynamics from the aforementioned literature. These ratios being the price-to-income ratio, price-to-rent ratio, and imputed-to-actual rent ratio. The imputed-to-actual rent ratio includes the user cost formula which is modified to fit the Finnish house market landscape. The results from the ratio analysis show only weak or non-existent proof of a bubble based on the severity when compared to results from the literature of other markets. Between apartment types, the price increase has been considerably higher for new type than for old implying overvaluation for new apartments, which can be seen throughout the ratio analysis as well. Final part includes the stationarity and the cointegration tests. The ADF test on stationarity is conducted on the first two ratios and results show that the price-to-income ratio is stationary for old type but non-stationary for new type. When the ADF test is conducted on first difference to validate the result, both types show stationarity, while for the price-to-rent ratio, both types show non-stationarity and on the first difference, old type stays non-stationary at 90% significance. Lastly, the cointegration model for testing if the house prices are deviating from the economic fundamentals is constructed. Results of cointegration test show that house prices cannot be explained by the set of economic fundamentals except household income since test statistic does not reject the null hypothesis of no cointegration. The conclusion outlines that although some of the results are showing towards a bubble, the evidence is too weak and insignificant to prove it.